Fed pressure on Lisa Cook

Federal Reserve governor Lisa Cook faces political pressure as Trump officials push to remove her while mortgage fraud allegations remain unproven.

Trump officials press Fed to oust Lisa Cook amid mortgage claims

The Trump administration has stepped up pressure to remove Lisa Cook from the Federal Reserve board, arguing that mortgage filings tied to two properties raise questions about her suitability for the post. Cook, appointed to the board by President Biden, says she will not bow to pressure and will cooperate with inquiries. The Fed and the Department of Justice have declined to comment.

Ed Martin, a White House official, urged Powell to act and highlighted the need to clear a cloud over the board. The Fed chair cannot remove a fellow governor under the Federal Reserve Act, a point critics say limits political manoeuvres. The DOJ is reportedly reviewing the allegations, while Cook has faced questions from other officials about her finances. The episode echoes past partisan episodes that unsettled trust in central bank independence.

This episode tests the boundary between democracy and technocracy. When politics intrudes on a central bank, markets may react with volatility and the public may doubt the policy process. The independence of the Fed rests on norms as much as law, and political pressure can erode trust and invite further challenges to officials.

For Cook the risk is to be defined by a cloud instead of her work. For Powell, the challenge is to balance accountability with the duty to preserve a credible policy framework. The longer this lasts, the more the message that the Fed acts independently is tested, even as lawmakers call for transparency and quick resolution.

Highlights

The coming months will show whether norms can withstand political storms.